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The Serious Fraud Office will “face problems” securing convictions for individuals in relation to the London interbank offered rate rigging scandal, with one commercial lawyer describing the current law in this area as “inadequate”.

Michael Clarke, commercial litigation specialist and partner at law firm Clarke Willmott, told FTAdviser that the SFO will struggle to prove that the banks involved intended to manipulate Libor to make a gain as most of the manipulation was ‘lowballing’, that is pushing the rate down.

On Wednesday (25 July), the European Commission announced that it was going to amend the proposals for regulation of insider dealing and market manipulation which would make Libor fixing illegal.

However, according to Mr Clarke, Libor fixing in the UK “could already be a crime”.

He added, though, that there are several potential reasons why such manipulation may not be considered a crime in particular circumstances, such as the need to ascertain, firstly, whether banks have a legal duty to disclose Libor rates.

Mr Clarke said: “There are three sections that really describe the Fraud Act 2006. Fraud by false representations, so being knowingly untrue, and failing to disclose information, which is fraud by omission.

“Are banks under a legal duty to disclose Libor rates? If not, there is no contractually obligation so it cannot be a breach of omission.

“The other section is fraud by an abusive position. Banks could be expected to safeguard interests and it could have abused that position by omitting details.

“This is the closest to banks in these scenarios as banks can be expected to safeguard financial system. However, I do admit this is an optimistic/moralistic picture.”

Mr Clarke said that to convict under the Fraud Act requires proof that the action taken by the party is dishonest and they have to have intent which would be to make a gain. “This is the most difficult to prove”, Mr Clarke added.

Mr Clarke said: “The problem is, in the main, they put Libor rates down so people would have benefited.

“That’s why the law is inadequate, as most will fall down at the last hurdle, and that is why Europe, for consistency, needs to come up with a formula.

“They may have made dishonest statements but lacking intent to make financial gain. The SFO will need to find some really explicit emails which explains how the banks will make financial gains out of this.

“In broad terms, it is sensible to have the SFO in to have a look at this but will face problems to get to the point to prosecute.”